Property insurance is undertaken to provide protection to the property against risks like fire, theft, and some weather damage. All these risks include specialized forms of insurance, such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance. Property is insured in two main ways - open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion and theft.
There are three types of insurance coverage. Replacement cost pays the cost of replacing your property regardless of depreciation or appreciation. Actual Cash Value provides replacement minus depreciation. When you obtain an insurance policy, the coverage limit established is the maximum amount the insurance company will pay out in case of loss of property. For instance, in case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high value items, the insurance company may ask to specifically cover these items separate from the other household contents. If a fire leaves your home uninhabitable, the policy can help pay for a hotel or other living arrangements. |
